The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Capital adequacy guidelines, and for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities and certain off balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors. The Company and the Bank’s Common Equity Tier 1 capital includes common stock and related paid-in capital and retained earnings. In connection with the adoption of the Basel III Capital Rules, we elected to opt-out of the requirement to include accumulated other comprehensive income in Common Equity Tier 1.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If less than well capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2026 and December 31, 2025, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.


	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required Plus Capital Conservation Buffer				To Be Categorized As Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)
STELLAR BANCORP, INC. (Consolidated)
March 31, 2026
Total Capital (to risk-weighted assets)	$	1,322,183	15.48	%	$	683,464	8.00	%	$	897,046	10.50	%	N/A		N/A
Common Equity Tier 1 Capital (to risk-weighted assets)	1,193,324		13.97	%	384,448		4.50	%	598,031		7.00	%	N/A		N/A
Tier 1 Capital (to risk-weighted assets)	1,203,580		14.09	%	512,598		6.00	%	726,180		8.50	%	N/A		N/A
Tier 1 Leverage (to average tangible assets)	1,203,580		11.29	%	426,520		4.00	%	426,520		4.00	%	N/A		N/A
December 31, 2025
Total Capital (to risk-weighted assets)	$	1,301,075	15.73	%	$	661,851	8.00	%	$	868,679	10.50	%	N/A		N/A
Common Equity Tier 1 Capital (to risk-weighted assets)	1,173,283		14.18	%	372,291		4.50	%	579,119		7.00	%	N/A		N/A
Tier 1 Capital (to risk-weighted assets)	1,183,509		14.31	%	496,388		6.00	%	703,216		8.50	%	N/A		N/A
Tier 1 Leverage (to average tangible assets)	1,183,509		11.52	%	410,785		4.00	%	410,785		4.00	%	N/A		N/A
STELLAR BANK
March 31, 2026
Total Capital (to risk-weighted assets)	$	1,256,576	14.74	%	$	682,062	8.00	%	$	895,206	10.50	%	$	852,577	10.00	%
Common Equity Tier 1 Capital (to risk-weighted assets)	1,155,974		13.56	%	383,660		4.50	%	596,804		7.00	%	554,175		6.50	%
Tier 1 Capital (to risk-weighted assets)	1,155,974		13.56	%	511,546		6.00	%	724,691		8.50	%	682,062		8.00	%
Tier 1 Leverage (to average tangible assets)	1,155,974		10.86	%	425,814		4.00	%	425,814		4.00	%	532,267		5.00	%
December 31, 2025
Total Capital (to risk-weighted assets)	$	1,241,007	15.03	%	$	660,452	8.00	%	$	866,844	10.50	%	$	825,566	10.00	%
Common Equity Tier 1 Capital (to risk-weighted assets)	1,141,442		13.83	%	371,504		4.50	%	577,896		7.00	%	536,618		6.50	%
Tier 1 Capital (to risk-weighted assets)	1,141,442		13.83	%	495,339		6.00	%	701,731		8.50	%	660,452		8.00	%
Tier 1 Leverage (to average tangible assets)	1,141,442		11.14	%	410,038		4.00	%	410,038		4.00	%	512,548		5.00	%

The Company’s principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. In addition, the Company’s credit agreement with another financial institution also limits its ability to pay dividends. Under applicable banking regulations, the amount of dividends that may be paid by the Bank in any calendar year is limited to the current year’s net profits combined with the retained net profits of the preceding two years, subject to the capital requirements described above.